With Americans reeling from a global financial crisis, dozens of former Washington Mutual insiders have come forward to expose what they claim were calamitous executive decisions that led to the biggest bank failure in U.S. history.

These former WaMu employees, 89 of them who worked throughout the company and around the country, described a bank eager to profit from a housing boom and lending frenzy that seemed to have contributed to the credit crunch and housing bust now plaguing the economy. Some of them spoke to ABC News, all of them are confidential witnesses in a recently filed shareholder class action lawsuit against WaMu.

In court documents, the insiders said the company's risk managers, the "gatekeepers" who were supposed to protect the bank from taking undue risks, were ignored, marginalized and in some cases, fired. At the same time, some of the bank's lenders and underwriters who sold mortgages directly to home owners said they felt pressure to sell as many loans as possible and push risky but lucrative loans onto all borrowers, according to insiders who spoke to ABC News.

And this is "only the tip of the iceberg,"a former high-level executive claimed in the lawsuit.

A company representative told ABC News that Washington Mutual Inc. would not comment for this story.

Former Risk Manager: WaMu 'Took the Brakes Off the Car'

Dale George, a former WaMu senior risk manager who spoke exclusively to ABC News, explained that risk managers are like the brakes on a car. WaMu executives "took the brakes off and drove over a cliff," he said.

George described how he said senior management willfully ignored warnings from its own "gatekeeper," the bank's risk management group. He and other company insiders claimed that risk managers were brushed aside while the business units adopted a strategy of dangerous and reckless lending that eventually took down the company.

George, an MBA with three decades of experience in banking and risk management, said that the WaMu he joined in 2003, "was all about good old-fashioned banking." He described a company with a rigorous risk management program and sensible loan production. It was a bank he said he was proud to work at.

But as the housing bubble swelled and high-risk mortgage lending became more lucrative, the bank changed, according to George. WaMu began approving as many loans as it could. "Everything was refocused on loan volume, loan volume, loan volume," he told ABC News.

And to further boost profit, WaMu increased its share of higher-risk subprime and option adjustable rate loans, known as "option arms," said George. These loans offer low introductory rates and let borrowers defer interest payments, but can strap them with significantly higher interest rates and payments in the future.

George said WaMu was competing with subprime giant Countrywide, which also imploded. "They were in a
neck-and-neck race." and "both went off the cliff together, one after the other," he said. This high-risk, high-return game turned a century-old traditional bank that made steady but modest returns into "just an arm of Wall Street," said George.

WaMu executives knew of these risks but chose to ignore them, according to statements by former WaMu insiders cited in the lawsuit. In a September 2005 confidential "Corporate Risk Oversight Report" obtained exclusively by ABC News, WaMu's own risk management team found that the future performance of popular loans like Option Arms was "untested" and created "major and growing risk factors in our portfolio."

This document shows that the top WaMu executives "were on notice that their own risk management systems had no ability to even measure, let alone control, the extraordinary risks that they were taking," according to Chad Johnson from Bernstein Litowitz Berger & Grossmann LLP, attorneys for the plaintiff shareholders.

But rather than heeding this warning, George said risk managers were told to "lay off." In an October 31, 2005 e-mail also obtained by ABC News, one WaMu executive told risk managers about a "cultural change" at the bank, and urged them to "lead the charge in modifying the perception of compliance and risk oversight from a regulatory burden to a competitive advantage."

George said this had a chilling effect: It told risk managers that they "could not raise meaningful issues" and "really had to sweep negative findings under the carpet."

George told ABC News that he refused to sweep away his findings. He claimed "there were a number of instances where I was pressured to fix a certain rating or upgrade the rating."

In one case, he said he refused to improve the risk rating on a $50 million commercial loan, an improvement that would have allowed the bank to significantly increase the loan. For that, he said he was taken off the project, reprimanded by senior management, and eventually fired when he raised his concerns to top executives. WaMu denied any wrongdoing and said the firing wasn't retaliatory.

To those wondering why no one saw the risks, George responded: "We did. ... WaMu had all these great, experienced risk managers around. But they were ignored."

Pressure to 'Sell, Sell, Sell,' Said Former WaMu Lenders

With no gatekeeper, former WaMu lenders and underwriters described the companywide loan approval process as "very scary." They claimed there was an "abandonment of basic tenants of underwriting and risk" and said loans were made to anyone, because "once you get paid, you don't care what happens," according to legal documents. "It was all about sell, sell, sell," according to a former WaMu lender identified only as Confidential Witness 7.

Dorothea Larkin, a former WaMu senior underwriter, told ABC News that she was uncomfortable with what she said were loose lending standards. "It was all about making the numbers, closing all the loans that came through the door," she said -- loans like higher risk option arms and subprime.

WaMu's underwriters were told not to question whether or not a home loan should have been approved, but just to ensure certain lending procedures were followed, according to Larkin. She called this hands-off underwriting approach "unusual."

Larkin described a bank eager to loan money at any long-term cost. For example, she said WaMu lent millions to a borrower even after he defaulted on a multimillion dollar home construction project. "We just kept giving him money," she said, "and I'm sure that's one of the foreclosures WaMu is still sitting on."

Larkin blamed senior management, and like George, claimed that she and many others saw it coming.

"The executives are the ones who made the decision to take WaMu in this direction," she said. "Too many of the middle folks like myself said this is wrong, we're making loans we shouldn't be making, we're qualifying borrowers who we know are going to struggle to pay the loan back."

Undated internal documents obtained by the shareholders' lawyers suggest that to increase profits, WaMu pushed risky loans on just about anyone, even borrowers likely to default.

In a WaMu Option Arm presentation titled "Washington Mutual Option ARM: At last a mortgage that puts your clients in control of their monthly payments," the company described the "Arm Borrower" as being "All Ages," "Any Social Status," and "All Economic Levels." Johnson said this shows a bank "trying to shove this extraordinarily risky mortgage on everyone out there."

Investors Lose All, Accuse Company of Lying

While just a year ago, WaMu stock traded at about $36 a share, it's now essentially worthless. Angry investors now taking WaMu to court claim they were lied to.

"WaMu was saying, consistently, up to the end, that they were conservative, prudent, rigorous," said Johnson. But in reality "it was run in a way that was irresponsible, reckless, dangerous," he contended.

The bulk of WaMu investors are pension funds, "funds that were looking out for firemen, for teachers, for nurses, for policemen alike," claimed Johnson.

People like Tedda and Benjamin Hughes, a San Francisco couple who invested almost their entire savings, $27,000, into WaMu stock because they said they really liked the bank and thought it was a safe long-term investment.

Tedda, a stay-at-home mother, and her husband, Benjamin, a teacher earning $55,000 a year, said they now must skimp on everything. "If there was a corner that can be cut, we do it. We're driving a thousand-dollar car, we rent this place. ... I clean with vinegar instead of getting a fancy product," she told ABC News.

The Hugheses said it took a long time to save that money, and that "it's absolutely horrifying to go from something to really nothing. .. then have to start all over, change all of your plans, your entire life."

And they said it shouldn't have happened. Tedda told ABC News that she did her research by diligently reading research and investor reports and checked the stock price daily. She said that up until the end, even hours before the bank collapsed, WaMu's investment division kept assuring shareholders that they had more than enough money to weather the storm.

"We understood that there was a risk," she said, "but we didn't think that the company was just going to go under."

"It felt like robbery. It felt like a violation," said Tedda.

The Hugheses said they're scared and angry, their anger amplified by the fact that WaMu executives like former CEO Kerry Killinger took home more than $51 million in cash and stock from 2004 to 2007, while they lost everything.